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French Connection Issues Profits Warning After Poor Christmas Sales

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FRENCH CONNECTION PROFITS WARNING
French Connection issue another profits warning, following three profits warnings in 2012 | Alamy

Clothing retailer French Connection has issued a profits warning after it reported disappointing Christmas sales and now expects a full-year loss of between £7.5 million and £8m.

The loss is bigger than expected - most analysts had suggested a £6m year end loss prior to Wednesday's announcement.

French Connection said sales in its retail business in the UK and Europe softened in the run-up to Christmas, with like-for-like sales falling by 2.9% in the 24 weeks to 12 January. The retail business from the UK and Europe makes up around half of the company's total revenue.

It also delayed discounting during the Christmas period by a week in an attempt to build brand equity, resulting in a 1.9% like-for-like fall in sales.

"French Connection is finding out the hard way what happens when a fashion brand starts to lose its value," Nick Hood, business analyst at Company Watch, told the Huffington Post UK.

"Unlike at some of its competitors, which have grown sales strongly over the festive season despite refusing to discount, FCUK customers clearly needed some incentive to stay on board with the current offering.

"Its financial profile is also deteriorating, though, from a previously strong base. Not only are its losses increasing, but the cash pile is dwindling. Management have much to do to restore French Connection to its former glories."

French Connection issued a three profits warnings in 2012, prompting a review of its UK and European retail operations.

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